Awarding third-generation (3G) mobile phone licences through a merit-based 'beauty contest' approach will result in lower end- user fees and increased investment in new telecommunications infrastructure and services. Albert Wong, chief executive of New World Telephone Holdings, said an open auction system, as supported by Hutchison Telecom, would only raise the cost of 3G licences and drain the infrastructure investment capital of smaller operators. He called upon the Office of Telecommunications Authority (Ofta) to carefully weigh the impactof the process on the telecom market. 'We think the merit process would be in the best interest of the consumers because we have to pass on the cost to them and that is not healthy for the development of the mobile communications industry in Hong Kong,' Mr Wong said. The 3G auction process in Britain was estimated to add US$15 in service fees per month to each end-user. He said telecommunications operators faced large infrastructure costs in the coming years and that the additional cost burden brought on by an auction would stifle innovation. 'The major challenge for Ofta is to make sure it creates a level playing field for those investors who are committed to the development of future services,' Mr Wong said. 'It [Ofta] has to balance the interests of existing operators who have paid in a lot of equipment investment in the mobile industry.' Apart from Hutchison Telecom, all existing second-generation (2G) mobile phone operators - Cable & Wireless HKT, SmarTone Telecommunications, Sunday Communications, Peoples Telephone and New World Telephone - favour the so-called beauty contest. Third-generation mobile technology will foster a wide range of multi-media services, enabling mobile users to access the Internet, send e-mail and download music and video clips. Mr Wong said a merit-based licensing process would also be in line with the government's posi tion of promoting information technology in Hong Kong. 'In order for 3G services to grow rapidly, it is very important for operators to be able to focus their resources on the development of services and platform infrastructure.' Mr Wong suggested Ofta look to its previous practice whereby 2G licences were issued under a structure which encouraged competitive tariffs. To ensure a fair process in the 3G licensing, Wong advocates a selection criteria which weighs an operator's track record and commitment to market development. NWT plans to launch a number of Internet-enabled services over a 3G network with emphasis upon on mobile commerce, shopping and entertainment.